Airlines in India High cost, low fare syndrome
The IATA Agents Association Of India (IAAI) has been fighting tooth and nail against the commission issue and addressing concerns of the agents. speaks to the association discussing FDI and their endeavours.
IAAI’s recent accomplishments include the formation of a committee for Strategic Alliances and Partnerships with an idea to build bridges and forge meaningful partner- ships with various stakeholders in the travel, tourism and hospitality industry.
“The Board of Directors meeting held on September 29, 2012 inducted members with vast experience and knowledge in the travel industry to spearhead the new strategic alliances and partnership committee and to help develop meaningful relationships,” says Biji Eapen, President, IAAI.
Analysing the aviation sector, the industry’s backbone from an agent’s point of view, Eapen explains, “The aviation industry in India today gives rise to a feeling of deja vu. The scenario looks pretty much the same, as it existed in late forties and early fifties when there were quite a few carriers operating air transport services but almost all were making losses and looking up to the Government for assistance. However, the airlines cannot run for too long if they are making losses. The Indian airline industry is suffering from the high cost, low fare syndrome. The operating cost has been moving upwards incessantly due to rise in maintenance cost, staff salaries, fuel cost, RNF charges, airport charges and taxes. But the airlines are unable to raise the fare levels sufficiently to recover the full cost because of fear of losing traffic to their competitors. The result is that there is under-recovery of cost despite good load factors and hence losses. The low fare culture, which was initially hailed as a boon for the industry, seems to have become its bane.”